So good morning everyone and welcome to British American Tobacco 2014 Full Year Results presentation. I am Nicandro Durante, Chief Executive Officer of British American Tobacco and with me this morning, we have Ben Stevens our Finance Director. And as always a warm welcome to those of you who may be listening to the conference call or watching via our website bat.com. As usual after taking you through the results presentation, there will be an opportunity for those of you in the audience to ask questions. 2014 has been a challenging year for consumer goods companies generally. Why is the tobacco industry’s more resilient than most, it is not immune from the micro economic environments? However I’m pleased to say that British American Tobacco has continued to perform well and the group has delivered another good performance in 2014. Although currency movements had a significant effect on our reported numbers, on a constant currency basis, we grew revenue 3%, profit more than 4% and EPS 8%. This is a very good performance given the weak economic environment, significant excise increases in two of our largest markets and an increase in competitive price activity during the year. Volume was down 1.4% against an industry down [ph] around 2.5% as we continue to grow share. This was driven by another excellent performance from the Global Drive Brands, with volumes up nearly 6% and share up 90 basis points. Pricing in the vast majority of our markets remain strong and price mix of 4.2% for the full year reflects the later timing of price increases during the year with a good uplift in price fix in the final quarter. We continue to make good progress on our operating margin, which was up over 50 basis points to 38.7%. Exchange rates had nearly a 12% translational impact on reported EPS, however I’m pleased that on a constant currency basis we have again delivered on our commitment to high single figure earnings growth with a 8% increase in EPS. I’ll now hand over to Ben to take you through the numbers in more detail.

Thank you, Nicandro, and good morning everyone. Looking at the Group's performance by region, Group cigarette volume was down 1.4%. This was driven by good performances from EEMEA and Asia-Pacific together with a slowdown in the rates decline in Americas. Western Europe volume was impacted by continued industry decline driven by the weak economic environment, although there are signs that this is gradually improving. EEMEA, Asia-Pacific and the Americas all contributed to the good increase in revenue and profits, which at constant rates were up 3% and 4% respectively. Western Europe revenue was 2% lower mainly due to industry volume contraction and the partial absorption of excise increased in Italy and France. Adverse exchange rates affected all regions resulting in reported revenue and profit down 8% and 7% respectively. I highlighted the impact of foreign exchange on our reported numbers at the time of interim results and given the continuing appreciation of sterling, I’d like to do so again before we look at the regions individually. Some of our major currencies including the Brazilian real, Australian dollar, South African rand and the Japanese yen, have lost well over 10% against sterling while the Russian ruble’s fallen by nearly 50%. This resulted in a 12% reduction in reported earnings per share which marks an [ph] otherwise very good 8% in EPS on a constant currency basis. Predicting foreign exchange rates as a hazardous business binomially gives some guidance on the translational impact on results, if FX rates have stayed exactly where they are today. So the translational headwinds that we’ve faced over the last two years do look set to continue and at today’s rates the headwind would be 7% at the operating profit level and over 5% at the EPS level. However, the movement we’ve seen in transactional exchange rates…

Thank you, Ben. Ben has taken you through the numbers. I’d like now to take you through a few of my highlights about performance last year. First, I’m pleased that despite 2014 being a challenging year, on a constant currency basis we continue to deliver good operating revenue and profits and delivered on our high single figure earning growth commitment. As we highlighted at Q3, during 2014 we have seen an increasing competitive pricing leading to growth and the value for money segmenting some of our markets. However, we achieved good price in the vast majority of our markets leading to our price mix for the year of 4.2%. Geographic mix remains the main setting factor in price mix as we continue to grow strongly in the emerging markets. These results were delivered via continuing to invest significantly in a sustainable future for our business. This includes investment in growth opportunity markets such as Indonesia, Russia, Japan and new entries such as the Philippines and the next generation product development. We also continue to invest in our innovations roll out, this is reflected on our 10% share growth and the continued strong growth GDBs, which grew share by 90 basis points and volume by 6% to 278 billion. This is against [indiscernible] 2.5%. Now turning to each of the GDBs, Dunhill had another good year up nearly 3%, driven mainly by good performance in Indonesia, Brazil and Romania. In Indonesia, Dunhill grew volume by 29%, reaching a premium segment share of nearly 7% and a national share of almost 3%. The brand performed strongly in Brazil, growing 1.5 percentage points to reach a record exit share of over 12%. Dunhill was a key driver of the groups 30 basis point share growth in the premium segment. Kent global volume declined…

Two questions, one for yourself and one for Ben please. Firstly, I think discussed in your early comments about markets having a variety of trading - consumer impacts, some down-trading, some up-trading and some polarizing. Could you talk about in which you’re seeing any of those trends accelerating or decelerating? And then for Ben, my question is could you help us understand which countries are driving the transactional FX in fact and has BAT already taken pricing in some of those this year to mitigate that impact? Thanks.

In reality Eric, what we saw in - let me talk about the overall market first then I go to down-trade and up-trade in specific markets. What we saw in 2014, in reality some down-trading overall and you look at overall market [ph] was declined around 2.5%, premium was declined around 2%, but you saw the emergence of the value for money category that was growing 5%. So [indiscernible] premium is growing more than 3, 4 and low price was average of the market. And this has happened mainly because the consumers are stretched as we are discussing. Disposable income in the majority of the markets is coming down, we have still the economic crisis in Europe, so these reflect of all of these. And BAT has tapped this segment with the launch of Rothmans, so we are taking our fair share of growth, to be honest more than our fair share of growth because Rothmans is growing very fast. So we are using our market abilities to tap in this emergence of the segment. When you look at market-by-market, we always have the [indiscernible] there are markets that are up-trading, markets that are down-trading and markets in which you have a polarization. When I say a polarization, you see the premium segment growing and you see the value for money segment growing as well. So the mid-segment is the one that’s declining. One example of that is Brazil, Brazil you see the value for money segment growing and then at the same time you see premium growing and I’ve to say that we’re taking all the growth in premium because Dunhill, that’s the most premium brand in the market from the pricing point of view as well, has grown from 10.5% to 12.1% at the end of the year. So it’s a growth of 1.6%, which is phenomenal, 160 basis points premium Brazil, it is really a great fantastic [ph]. So Brazil is a clear example that you had this polarization. The same is happening for example in Romania, in which premium is growing through Dunhill and Kent, but value for money is growing as well. On the other hand you have markets in which has some up-trading. An example of that, you see Columbia, you see France, those markets we saw some up-trading last year and you have several markets that’s down-trading because of the economic situation and not only because of the current situation because sometimes its self-inflected by the industry. Australia is an example of that. You have a huge down-trading, self-inflected because you have players playing in the low price category and you had to do also. So Australia is one that we saw some down-trading; UK, we see some down-trading; Canada, we some down-trading. So some markets we see some down-trading, okay.

Yeah, let me tell you some good news. I mean the good news is that the dollar is strengthening and the Rupiah is strengthening and that’s why you see the translational impact on operating profit being greater than it is on EPS, so it’s 7% operating profit, but it’s only 5% EPS and that’s the effect the associate is coming through. The big currency devaluations we’re facing, I mean obviously is the ruble, the average rate of the ruble in 2014 was 63 and then later traded in 96, so that’s a big hit and I think that the gretna [ph], the average rate was 20, the latest rate is 42. So these are pretty eye watering rates, but even the riyal, average is 387, closing rate is 441, so it’s a broad spread across major currencies that we’re seeing yeah, the devaluation against sterling. Now the transactional impacts, these are early days. For example gretna moved 20% against the dollar two days ago. So these are very, very volatile conditions and we would expect to mitigate some of those transaction impacts with pricing and with cost reduction, which you can’t just price on your own. As Nicandro always says, we don’t have pricing power, the industry has pricing power and you got to be careful not to move too far ahead of a very stretched consumers, it’s always balanced FX you got to make. But where we can, where we’re experiencing significant devaluation along with which will come significant levels of local inflation, we’ll try and recover that with pricing.

Yes, David.

Hi, just a follow up on the, I guess [indiscernible] in terms you go into ’15, I mean in terms of the margin this year underlying of a 110 more pricing potentially - potentially more cost savings, transactional flows at minus 200, as it stands probably somewhere you discussed. The question being, I guess in terms of 50 to a 100 is that doable on a reported basis for the [indiscernible].

Yeah, I mean transactional is never 300 as we speak. We hope to keep driving operating margin growth and we look to drive it by 50 to 100 basis points a year. We’ve never said it would be 50 to 100 basis points each and every year. We say overtime we look at operating margin and we look to it exceeding 40% and then we’ve said that once it’s exceeded 40% we’ll give further guidance. Not necessarily that will stop growing operating margin, but we’ll know a lot more about the deployment of SAP. Now we’ll continue to drive cost side of this business, I still believe that there’s cost, so we can drive out of BAT. It will certainly be helped by the deployment of SAP, we’re live now [ph] in over 60% of our market, so it’s not through in Europe, chunks EEMEA, most Asia is done. Where we will end up on transactional FX is hard to say. It’s only February, this time last year I sat here and said, I think we’ve got an FX tail end [ph] behind us for the year and see how things turned out. So it will be tougher growing operating margin this year, if you’re facing 300 million of transactional FX, but we still remain hopeful go be driving costing out of this business and improving profitability.

Just to put up on next generation product development, is that a cost [indiscernible]?

Taking the first half of the year, obviously because we got a winning set of products now and it’s in our interest to roll this out as quickly as we can, so we’re trying to expand distribution, which comes with the cost.

And the last one just on Brazil, I guess the question is why now off from the currency tension, is there anything that’s changed as to why you’re now thinking about buying in minorities and then to your point earlier, you said about more integration, I mean if you do the buying does anything change that can you kind of highlight at this stage, it means Brazil becomes a different entity or subsidiary for BAT [ph]?

I think it’s - I mean we haven’t even made an offer yet, so I just want to make that point. And as we’ve always said, in terms of buying in minorities, the returns from buying in minorities are fairly skinny because there are no real synergy benefits from buying together field forces or closing factories or whatever. So we felt it was a good time to look at to buy out the minorities of Souza Cruz, if we decide to make an offer. I think that it could form a more central part of our operations in Latin America and that’s easier to do if you haven’t got leakage into minorities, so that’s the thinking behind it.

Hi, couple of questions. First, insights to the [indiscernible] on the margin, but extra transactional impacts, would you still be aiming for 50 to 100 basis points?

Absolutely.

Okay and then secondly on your tobacco heating products, you showed a picture of that which I’m sure if you guys can help nursing some similarities with the Philip Morris products. I wonder if you are able to say how you visit [ph] that being differentiated versus what’s already on the market?

The concepts are the same like in cigarettes, but the delivery is different. For obvious reasons, I’m not going to disclose now, what we have in the pipeline in a greater detail. But the most important thing is that we’re well advanced on the developments, we’re testing the markets already during 2015 and we’re ready for a launch in 2016. We’re learning what’s going on out there as well, so we have fine-tuned our products in order to have a very winning proposition. We think that we can win this category, I’ve always said, I had been saying this for the last couple of years, our ambition is to be the leader in next generation products that compares tobacco heating products and e-cigarette and I think that we can achieve that. Just to show our capabilities, what we have in the e-cigarette area for example, it took some time to launch the products, I have been talking about that for the last two or three years. Huge investments behind it and huge investments behind the tobacco heating products, but we’ve just come out to the market when we have a winning proposition and the products that are out there, after the launch in November, we have tripled our market share in UK. We have 6.5% market share coming from 1.7 and we’re growing by the week. In grocery that we focus we have 14% market share, in the pharmacy channels, another focus area, we have 37% market share, an inconvenience that you’re not focusing because of distribution capabilities have to grow there. We have a minimum share of 1%, so the possibility for growing fast is significant. It just shows that our strategy is paying off.

You mentioned as part of your three platforms, you’re likely to roll out Venel’s technology on [indiscernible], you didn’t mention Venel’s e-stick for product use, would that potentially be in your plans if that collaboration is finalized?

We mentioned when Reynolds went through the potential offer, the offer to Lorillard, that we’re looking for opportunities to work together in many areas and this is one them. But the tobacco heating products are little more advanced, but yes, we’re looking to opportunities that are out there with the views [ph] technology as well. But we usually under promise over delivering BAT, so I don’t want to promise anything.

[Indiscernible] couple of questions, one on pricing. You mentioned that pricing is coming a bit earlier this year, does that mean your expectations for the year returns to price mixes that we’ve been higher than 2014 or would that be offset by some of the down-trading? And secondly, as you mentioned about - you gave a sort of commitment on sterling dividend grade for 2014, does this serve [ph] something at this stage you’ll prepare to give it for 2015 as well or is that too early?

Okay, I’ll pick the pricing question. Ben is going to take the other one. Regarding pricing, pricing is more solid this year than last year, with exception of Australia, price is moving well across the world [ph], so price is more solid. It’s very difficult when you’re in February to make a prediction, how price mix are going to work throughout the year because we still have some pricing to go, we have portfolio mix effect that we need to understand a little bit better, it’s too early and you have the geographic mix that you need to understand as well. When I say that our price mix last year was 4.2%, pricing was much modern there, but you have the impact of some portfolio mix and the impact of geographic mix there, so we need to understand, how these three moving parts are going to work in 2015. But I have to say that, if I look now February 2015 versus February 2014, it looks more solid, no doubt about that , but we have to wait and see.

Yeah, Jon I mean we said last year that we want to reward our shareholders with a real increase in dividends in sterling terms. We’ve done that this year. We have a strong balance sheet, obviously we’ve looked forward to see what the impact of the Reynolds, Lorillard deal and doing the Souza Cruz deal, if we do make an offer would be. And I’m confident we can continue to reward shareholders with real increases in dividends in sterling terms, even if sterling continues to strengthen because we got a strong enough balance sheet and strong cash flows to deliver on that.

This is Adam Spielman from Citi, three questions [indiscernible]. First couple I’ll ask from [ph] hemisphere, can you give us an outlook for Australia. Secondly, in the document you’ve said there’s been I think some increased down-trading professional activity in South Africa and I think you said other African markets and so a little comment on the would be very nice too. And thirdly returning to the next generation question, are you planning to build clones [ph] to make the heat sticks anywhere or how should we think about capacity?

Okay, let me start with Australia. Three or four years ago as we had a player in the market playing the low price segment by itself. Because we had price increases in Australia, not moving that fast, the segment was growing and we were declining a little bit market share in the last three or four years, but not significantly, 3.4% and we let it go because we didn’t want to jump on that there’s profitability. But what’s happened, we had an implementation of the second year of the four year’s excise increase in Australia, 2.5% excise increase as you are aware of and the prices went up quite significantly and the segment started to grow very fast. So we had to participate there, so that’s why we launched at end of first half of last year, Rothmans. That was a very successful launch. This brand now, after eight, nine months in the market has 9% market share already. And BAT Australia in the second half of the year is back to growth, so this is very good. Unfortunately the pricing format is not very solid, just to have an idea, recently I think that one month ago we came with a price lists, a price increase, it was followed by one competitor, it was not followed by the other, we had to roll it back. So we’re doing better in Australia, I think we have to prepare [ph] the organization for the future. I’m very confident about the Australian market for the future, but the price environment is not very solid yet. The South Africa question, I think that when I was talking about low price competition was related to South Africa first of all. Let me talk a little bit South Africa, we have seen some low price…

Let me just come back on South Africa, two sub questions I guess. One is, can you talk about the pricing environment in South Africa specifically, you talked about Australia. And secondly, is the single player - in Australia there was a single player, I think you said that nearly triggered the down-trading, is that also true in South Africa or is it everyone is growing that or developing that results?

I’ll not use the expression growing that, we can use the expression of playing there because they’re not growing. We’re doing very well in South Africa. Well, we have completion from local players like in Brazil, we have competition for all international players and all of them are trying to play in the value for money categories stronger because the segment that they believe that can grow in the future. We have responded with the launch of B&H, we have responded with some actions in that market and these actions are working quite well. The price environment is moving in South Africa, but of course if you have more launches in the value for money, you have a tendency of having a down-trading. So there is some down-trading in South Africa, the answer is yes. But price is moving there. Should have been one of the markets when we’ve answered the question about down-trading, and there’s some down-trading there. Any other questions? Yes, John.

A quick one about Venezuela, can you remind us what exchange rate you’re using out there and is there any cash that’s stuck out there or are you getting cash back Venezuela happily?

Yeah, right. We translate Venezuela against the - against sterling is 71.65, obviously.

This goes by the minutes.

Yeah, that’s the point. It does change by the minute. We’re considering what happens in relation to the new rates the [indiscernible] rate that they’ve announced in Venezuela, obviously that’s floating anywhere between 170 to the dollar now and 200 and obviously that’s part of our consideration with the transactional FX that we highlighted this year.

Okay, one last question.

Yeah, Charles Manso from Soc Gen. On Russia, could you give us an update of what’s happening to the Russian premium segments and your share within the Russian premium segments and given the pricing and Russia has been so strong for the last two years, given the pressures on disposable income, whether that’s getting tougher going forward. That’s the Russian question. And just a follow up on the [indiscernible] questions on mix, you talked about mix a lot here, do you expect the general mix drag [ph] for the industry and for you in 2015 to be greater than it was in 2015?

Okay, regarding Russia. We have a substantial price increase last year around 8 to 9 rubles, we’re have in general this year as well. We usually have a second one in the second half of the year. I’ll talk about the history. So the consumers are under stress there, so we saw in Russia, some down-trading. That’s why the value for money category there is growing very fast and that’s why we launched Rothmans as an offer in value for money category. We still have the low price categories a little bit higher as an international offer in the value for money category. And it has been probably the most successful launch in Russia in the last years, so the brand is doing extremely well. So I’m very happy with the performance of the Russian business, profit growth was substantially higher last year compared to the previous year, so it’s moving well from the profit point of view. The industry is taking prices. Regarding the premium segment we see a decline in the premium segment, but Kent has declined a little bit of share 0.2 and share down because of the decline of the premium segment, but Kent inside the premium segment is stable. Our market share, one of my collogue [indiscernible] 44%, 45% of the segment has been stable, around stable and the brand has stabilized in the last part of the year of 2015, either with the decline of segments. So we put some innovations behind the brand like capsules, so we have hope that the value will go back to growth next year. But yeah, we see some down-trading in Russia, but from the profit point of view the industry is taking price and things are moving well from his point of view. Regarding the mix, well…

Just on the cost side, so lot of the SAP facilitate to cost [indiscernible] support service, is there a couple of competitors in Europe in particular we can figure production close to couple of [indiscernible] if it’s significant. Is there more the BAT plans to do on the operational side as Europe is something is which I think can talk about because of sensitivity, is there something that we should be looking forward in the next year or so, but we see [indiscernible] bigger things happening on the operational side of the business constantly?

Yeah, [indiscernible] is subject to information consultation rules in Europe, but obviously it expects a business with a decline in volume base to be reviewing its footprint, not just in Europe but globally and you can count on the fact.

Okay, thank you all very much for coming. We appreciate that. If you have any other questions, you can ask Mike and he will be right there to help you. Thank you very much.